Corporate due diligence and reporting is usually mentioned in conjunction with the financial audits of companies related to purchase or going public on the stock exchanges. However, a financial review, or even an extensive audit process, is not intended as a solution to ferreting out malfeasance, theft, workplace personnel interaction problems, or secretive actions that could be creating misleading financial ratios.
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Personnel Background Investigations
Part of ongoing due diligence is the vetting of applicants for employment, as well as scheduled background checks of existing employees. Our lives and situations change, and companies should be constantly vigilant regarding the lives, lifestyles, and outside financial issues of employees. We all love the Internet, but it’s not correct to believe that you can properly vet someone solely using the online resources available to the public. Trained investigators and their cultivated resources are often the only way to dig out issues of concern. Perhaps criminal histories under previous or assumed names will surface, but only through professional investigative techniques.
What you can find if you spend enough time on the Web are plenty of stories of trusted employees for many years suddenly becoming problems on the job or stealing property or intellectual assets. Something in their financial or personal lives has changed, and they resort to damaging their employer out of revenge or financial need. Regularly scheduled background updates is the best way to avoid these nasty surprises.
Potential Client Qualification
Every potential customer isn’t necessarily a good one for your company. This is especially true for large corporations in their contractual agreements with subcontractors or suppliers of materials or services. Before any major new contractual arrangement, a thorough background investigation of the potential client/customer is a smart move. You don’t want to get into contractual difficulties because your new client has a past history of fraud or stealing from vendors or customers. If they’ve done it before, they’re likely to do it again.
Sometimes just checking D&B and credit histories for a company is not going to get to the potentially damaging information necessary for a good decision. What shows in credit reports and on balance sheets may not be everything you need to know. Perhaps this potential customer has written off a damages payment after losing a lawsuit for practices with which you wouldn’t want to be involved. Put corporate due diligence investigators on the job for the full picture before you ink the deal.
Mergers & Acquisitions Due Diligence Investigation
Before companies merge or before acquisitions, financial auditing and due diligence is definitely necessary. However, just like in the potential client section above, you may not be getting the whole picture. What is missed can often be a major cause of future problems. If for no other reason than negotiating a better deal, putting professional investigators on the job can be a wise decision. Suppose, as in the previous example, there have been past lawsuit settlements that are not clearly delineated in the financial data. Digging into the background of the company you’re about to buy or merge with may yield some important negative information. It may not be enough to kill a deal, but it could put you into a superior negotiating position.
Kimmons Investigative Services, Inc. is staffed with highly experienced investigators with a history of turning up the type of information companies need to make better decisions in hiring, firing, management, mergers and acquisitions. Corporate due diligence is our specialty.